Proposal could cut off revenue to midstate boroughs

Written by Rachel McDevitt | Jan 31, 2018 1:03 PM

(Harrisburg) -- Nearly three dozen communities across the commonwealth buy electric power wholesale from a generator, then bill their residents for the service.

But now some are concerned a proposal in the state legislature will cut off their source of revenue.

Most of the municipalities--like Chambersburg, Ephrata, and Middletown--transfer the electric profits to general fund operations, such as law enforcement.

A state House proposal would prohibit that practice. The bill's sponsor, Representative Aaron Bernstine of Lawrence County, says it's a consumer protection measure.

Dave Woglom, executive director of the Pennsylvania Municipal Electric Association, calls it unnecessary.

"There is nothing broken about the way that these 35 municipalities operate--number one. Number two, we're talking about 35 municipalities out of 2,600 municipalities in the whole state," Woglom said. 

He adds, if the measure passes, it would take away local control. 

"These are decisions made by local officials who understand their communities, know the challenges, and have opinions as to how they want to best operate their municipality," Woglom said.

Woglom says if the plan becomes law, boroughs will be forced to raise real estate taxes or cut back on services and possibly lay off employees.

Rep. Bernstine says municipalities shouldn't be using their electric monopolies as a taxation tool.

He adds research done by House staff shows people who live in communities that provide electricity do not have a lower tax rate than those whose municipalities don't.

In a co-sponsorship memo, Bernstine said constituents who live in these types of municipalities "sometimes see their electric bills increase by a factors of 100-200% on a month to month basis without an increase in consumer consumption. This practice makes it impossible for residents to budget for their electric bill and is resulting in many households having their service turned off."

Woglom says electric rates in most municipalities are competitive with local electric companies. 

Middletown is being sued by one industrial customer, who claims it has paid excessive fees for electricity in the borough. 

The House Local Government Committee will hold a hearing on the bill February 13, at 10 a.m. 

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